Question

For option C for which data are provided below, which of the following statements is true?

		Annual increase
Initial Cost	$215,000
Salvage value (% of initial cost)	15%
Annual Costs	$10,500	8.00%
Annual Benefits	$48,000	12.0%
Life in years	10
MARR	16.00%

Group of answer choices

B/C ratio is 1.39 and IRR is 19.69%

B/C ratio is 1.39 and IRR is 21.45%

B/C ratio is 1.32 and IRR is 21.45%

B/C ratio is 1.32 and IRR is 23.41%

B/C ratio is 1.29 and IRR is 25.27%

B/C ratio is 1.29 and IRR is 23.41%

B/C ratio is 1.27 and IRR is 25.27%

B/C ratio is 1.27 and IRR is 19.69%

Answer 1

Option d is correct

IRR(values)

=IRR(Year0 to Year10 cashflows)

IRR=23.41%

PI=(Present value of future cashflows)/Initial cost

PI=(Year1 to Year10 cashflows)/215,000

PI=1.32